Agent Networks

Innovation Forum and Exhibition
19 September 2012
Protea Westwood Hotel
Lagos
Agent Networks:
Opportunities for Mobile Money in the
Distribution Value Chain
By Lazarus Muchenje
Celpay International BV
Group CEO
Agenda
MM Phenomena
MM Success Factors
Agent Success Factors
Distribution Value Chains
Mobile Money Phenomena
MM Phenomena
MM Success Factors
Agent Success Factors
Distribution Value Chains
Mobile Money Phenomena
2002:
Celpay Zambia Deployment
2005:
4 deployments in 4 countries
2007:
M-pesa deployed in Kenya
2009:
18 countries with Mobile Money deployments
2011:
48 countries with 126 deployments
Mobile Money Phenomena
Product Availability through mobile
Number of Countries
60
50
40
Bill Payments
Money Transfer
30
20
10
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Source: GSM MMU
Mobile Money Phenomena
Product Availability through mobile
8
7
Number of Countries
6
5
International Money Transfer
MFI Loan Repayment
Insurance
4
3
2
1
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Source: GSM MMU
Mobile Money Phenomena
Zambia Mobile Payments Platform Growth
2002 to 2009:
2009 to 2012:
Celpay
28 licensed companies
Source: Bank of Zambia
Mobile Money Phenomena
Source: World Bank
Who is Celpay?
•
Established in 2002
•
First Mobile company in
the World
•
Head office in the
Netherlands
•
Subsidiaries in the UK,
Uganda, DR Congo,
Zambia, Zimbabwe and
Tanzania
Who is Celpay?
•
Pioneer Mobile Financial Services company in the World
•
1st Mobile Financial Services Company with a profitable business model
•
Over 400 agents countrywide.
•
18 Banking partners and over 15 Corporate partners using Celpay
•
Over $20M in monthly transaction value
•
300 SMEs on the Celpay platform
•
Zampost is anchor agent
•
BOZ approved and licensed
•
Wall Street Journal Europe Award 2003 for Innovation
•
Arch of Europe Gold Award 2011
•
World Bank Partner on DRC Conader Project Phase I (2004) & II (2009) 120,000
soldiers – USD100m / 30 000 soldiers - USD 22.5m
Who is Celpay?
Who is Celpay?
Celpay Zambia corporate partners
RURAL FINANCE PROGRAMME
MINISTRY OF FINANCE AND NATIONAL PLANNING
Who is Celpay?
Celpay Zambia partner banks
Who is Celpay?
Who is Celpay?
Beverage Payments
31%
Celpay (53 dealers)
Cash / Cheque
69%
Celpay Zambia contributes over 30% of payments to Beverage companies
Beverage companies have 53 dealers paying through the Celpay platform
Celpay currently facilitates payments for 2 beverage companies
Who is Celpay?
Pay TV Celpay Agent Payments
Contribution
4 Fuel Mini Marts
5 Pharmacies
5 Retail Shops
47 Post Offices
100+ other
40%
35%
30%
25%
20%
15%
10%
5%
Pay TV Payments
0%
Fuel Company
Post Office
Pharmacies
Retail Shops
(P'nP & Shoprite)
Other
Series1
32%
Celpay
Cash / Cheque / Other
68%
Celpay facilitates payments for 2 Pay TV
companies
Who is Celpay?
Mobile Money Success Factors
MM Phenomena
MM Success Factors
Agent Success Factors
Distribution Value Chains
Mobile Money Success Factors
Aggressive
Agent
Branding
• Ensure product
visibility
• Ensure agent
visibility
Source: CGAP
Mobile Money Success Factors
Reliable
Agent
Network
• Liquidity
• Trusted
• Wide Spread
Source: CGAP
Mobile Money Success Factors
Reliable
Mobile
Money
Platform
• Secure
• Easy to use
• Reliable
Mobile Money Success Factors
Simple &
Transparent
Pricing
• Clear pricing
• Affordable
• Consumer
Education
Source: CGAP
Agent Network Success Factors
MM Phenomena
MM Success Factors
Agent Success Factors
Distribution Value Chains
Agent Network Success Factors
Ubiquitous
• High distribution
of agents across
the country
Agent Network Success Factors
Trust
• Agents should be existing
operations in use
• There has to be a high
degree of trust
Are these brands trusted by potential clients?
Agent Network Success Factors
Liquidity
• Availability of float
• E-money (cash in)
• Physical Cash (cash outs)
Cost Factor
• Cost structures for agents
should be low
Distribution Value Chains
MM Phenomena
MM Success Factors
Agent Success Factors
Distribution Value Chains
Distribution Value Chains
Nature of Distribution Value Chains
Are DVC an Agent Perfect Fit?
Potential Challenges
Conditions for Successful Implementation
Potential Benefits
Distribution Value Chains
Nature of Distribution Value Chains
Are DVC an Agent Perfect Fit?
Potential Challenges
Conditions for Successful Implementation
Potential Benefits
Nature of Distribution Value Chains
Petroleum and Gas Products
Manufacturing
Transportation
Beverages: Bottlers and Breweries
Pharmaceuticals and Healthcare
Courier Services
Other
Nature of Distribution Value Chains
Nature of Distribution Value Chains
FMCG
Ubiquitous
Low Cost
• These are distibutors of fast moving consumer goods
• These companies have an extensive reach across the country
• Legal persona; subsidiaries, branches, franchises, agents, etc
• Possibility of central management and administration of
network
• Existing business therefore low cost of setup and operation
• Increased revenue with minimum incremental expense
Nature of Distribution Value Chains
Existing
Structure
• Network has an existing structure enforcing
controls on;
• Cash Handling, Security and Banking
• Administration and Reporting
Nature of Distribution Value Chains
Trust
• High degree of trust by existing clients
• Interact daily with customers on existing
products
Nature of Distribution Value Chains
Liquidity
• These companies are highly liquid
• High liquidity as a result of daily sales of
goods
Typical small shop
devotes US$1200
to M-PESA capital
Source: CGAP
Distribution Value Chains
Nature of Distribution Value Chains
Are DVC an Agent Perfect Fit?
Potential Challenges
Conditions for Successful Implementation
Potential Benefits
Are Distribution Value Chains a Perfect Fit?
Buying and
Selling a
different
commodity;
e-money?
High use of
technology?
Customer
Registrations
?
Airtime
Dealers
would be
better?
Distribution Value Chains
Nature of Distribution Value Chains
Are DVC an Agent Perfect Fit?
Potential Challenges
Conditions for Successful Implementation
Potential Benefits
Potential Challenges
Mobile Money
Concept
Regulation
Technology
Platform
Fraud
Contracts
• Intensive training for agents is recommended.
• At least 2 days of engagement (recommended by CGAP)
• Flexible regulation that takes note of low values transacted for mobile
money
• Ensure that a tried and tested platform is used
• Auditable system
• High reporting requireents especially aroud AML and CFT
• Limitations on transactional values
• Improvement of physical security
• Insurance
• High incentive for corporate agents as these are easier to manage
• Clear contracts between parent corporate, retailer agent and
employees
Potential Challenges
Slow moving
MM stock
• Creation of Super Agents who are highy liquid
• Loan facilities to improve product uptake
Float
Management
• Extensive training for agents
Lack of trust on
MM product
• Deliberate promotion of mobile money by government and other bodies
• Transparent pricing of mobile money
• Reliable IT systems
AML / CTF
• Extensive training of agents
• AML reporting tools
Technology
Phobia
• Simple mobile money platforms
• Extensive training of agents
• Deliberate promotion of mobile money by government and other bodies
Distribution Value Chains
Nature of Distribution Value Chains
Are DVC an Agent Perfect Fit?
Potential Challenges
Conditions for Successful Implementation
Potential Benefits
Conditions for Successful Implementation







High customer incentives for MM take up
Flexible regulatory agent structure
Suitable technology for operation
Agent structure; provision for super agents
Adequate training from MM companies
Elimination of Exclusivity contracts
Interoperability
Conditions for Successful Implementation






CBN drive for cashless society
Penalties on cash deposits by individuals
Penalties on cash deposits by Corporates
National Central Switch
Interswitch
Large population using cash??
Distribution Value Chains
Nature of Distribution Value Chains
Are DVC an Agent Perfect Fit?
Potential Challenges
Conditions for Successful Implementation
Potential Benefits
Potential Benefits
Source: World Bank
Source: Visa
Potential Benefits
Consumer Trust and Use
More products continue to be introduced on mobile platforms
Phase 1
Basic Service
Money remittance
Simple payments
Phase 2
More
Sophisticated
payments
Phase 3
Savings
Leave Money
Behind
Extending the services and the eco system
Phase 4 and
Beyond
Credit, Insurance
and other
Innovative
Services
Potential Benefits
INCREASED
TRAFFIC
ADDITIONAL
INCOME
REGISTRATION
SUPERIOR
CONTRACT
• A lot more people will be coming through to the agent shop for MM
services
• Mobile Money transactional revenue
• Purchases on mainstream business from mobile money
• Account registration for Mobile Money
• Account registration for SIM card tracking (KYC)
• As a corporate entity, contract with mobile operator should be
highly incentivized
• Less administration from MM company
Potential Benefits
BULK
PAYMENTS
• Agents can disburse microfinance loans, micro-insurance claims and
pension payments
AGENT
MONEY
TRANSFER
• Despite a growth in MM, there is still high activity on agent to agent
transfers
INSURANCE
• Agents can advance to being insurance agents that can sell basic
insurance products
Potential Benefits
BILL PAYMENTS
BRANCHLESS
BANKING
• Despite the MM facility of individuals
making payments, agents would still be
able to make payments for client bills
over the counter
• Agents can collect microfinance loans
and micro-insurance premiums
• Agents have a privileged
position of offering
branchless banking to
banks when regulations
provides for it
Corporate Agent Creation
AGENT
RELATED
BENEFITS
DRAW BACKS
• Create loyalty amount dealers as additional and innovative
product
• Increase revenue for dealers
• Obtain a fraction of the mobile money revenue made by dealers
• Set up and Management of Agent network
• Different methodology and skills required for agent setup
• Time and monetary effort required
• Constant Monitoring of agents
• Divided attention
• Core business might suffer
• Agents might move to deal directly with MM operator
Potential Benefits for Corporate Companies
ONLINE
PAYMENTS
STOCK
PURCHASES
• Airline and other transportation booking payments can be
accepted by companies
• This enables clients to make payments over the phone like VISA
payments at Amazon
• Mobile money becomes a medium of payment for stock for dealers
of companies;
• Lafarge
• SABMiller
• Airtel / MTN / Zamtel
• Easy administration of payments through MM platform
Q&A
ceo@celpay.com